United Spirits, the country’s biggest liquor firm, said price tags for its brands will go up by 14-17% in Karnataka after the state announced a 20% increase in additional excise duty (AED) on Indian-made liquor (IML) from August.
With annual sales of 68.4 million cases, Karnataka is the largest alcohol consuming state accounting for 18% of India’s overall sales. This is despite the state having the highest tax rate on liquor in the country.
“This was not a welcome tax increase. The tax rates in Karnataka are already much higher. A 20% tax increase, in effect means that MRP of our brands will likely go up in the range of 14 to 17%.
So, they become even more expensive in the state than they were already,” Hina Nagarajan, managing director at USL, told investors.
“It’s too early to call out the impact on demand but our experience suggests there is generally a negative impact when prices go up.”
